1.
BUSINESS FINANCE
MANISH KUMAR
MANISHATMARKETING@GMAIL.COM

2.
IN THIS UNIT WE WILL STUDY ABOUT
• Business finance- financial need of business
• Methods and sources of finance
• Security market
• Money market
• Study of stock exchange and SEBI

3.
MEANING OF BUSINESS FINANCE
• Business finance refers to money and credit employed in
business.
• It involves procurement and utilization of funds so that
business firms may be able to carry out their operations
efficiently.
• It encompasses a wide range of activities and disciplines
revolving around the management of money and other
valuable assets.

4.
CHARACTERISTICS OF BUSINESS FINANCE
• Business finance includes all type of funds used in business.
• Business finance is needed in all types of organisation- large or
small, manufacturing or trading
• The amount of business finance differs from one business firm to
another depending upon its nature and size. It also varies from time
to time
• Business finance involves estimation of funds. It is concerned with
raising funds from different sources as well as investment of funds
for different purposes.

5.
FINANCIAL NEED OF BUSINESS
To purchase fixed assets
To funds business growth
To meet contingencies
To meet day to day expenses
To bridge the time gap between production and sales
To avail of business opportunities

6.
IMPORTANCE OF BUSINESS FINANCE
Need for large-
scale operation
Use of
modern
Technology
Promotion
of sales

7.
TYPES OF BUSINESS FINANCE
Types of finance Period of Repayment Purpose
Short Term less than a year
Purchase of raw materials, payments of
wages, rent, insurance etc.
Medium term One year to five years
Expenditure on modernization, renovation,
heavy advertising etc.
Long-Term more than five years
purchase of land and building, plant and
machineries etc.

8.
FIXED CAPITAL AND WORKING CAPITAL
• Fixed capital refers to the total value of assets in a business which is of durable nature
and used in a business over a considerable period of time. It comprises of assets like
land, building, machinery, furniture etc.
• The capital invested in these assets is fixed in the sense that these are required for
permanent use in business and not for sale.
• Working capital consist of those assets which are either in the form of cash or can
easily be converted into cash, e.g., cash and bank balances, debtors, bills receivables,
stock, etc. These assets are also knows as ‘current assets’.
• Working capital is needed for day to day operations of business. However a part of
working capital is required at all times to maintain minimum level of stock and cash to
pay wages and salaries, etc. This part of working capital is called ‘permanent working
capital’.

9.
DIFFERENCE BETWEEN FIXED CAPITAL AND WORKING
CAPITAL FIXED CAPITAL WORKING CAPITAL
Fixed capital may be defined as capital invested in
long-term assets.
Working capital may be defined as capital invested
in current assets
Requirement
Fixed capital is required for establishment of
business.
Working capital is required to utilize fixed assets of
the company.
Sources of Funds
The industrial units mobilize fixed capital from
various sources like shares, debentures, banks etc.
which are to be repaid over long time period.
The industrial units mobilize working capital from the
commercial bank loans, profits retained, etc. which
are repayable before one year.
Conversion
The fixed capital which is used for fixed assets is
not easily convertible into cash.
The working capital investments have high liquidity
and can be easily convertible into cash.
Nature
Fixed capital is a one-time investment to purchase
fixed assets for starting a business or for expanding
a business.
Working capital is required constantly for day to day
business activities of the organization.
Duration
Fixed capital in long-term investment i.e it is
invested at the for long periods of time.
Working capital is usually a short term investment
for running of businesses day to day operations.

10.
METHOD AND SOURCES
OF FINANCE

11.
METHODS AND SOURCE OF FINANCE
Internal
sources
External
Source

12.
LONG TERM SOURCE OF FINANCE

13.
EQUITY SHARES
• Equity shareholders are the real owners of the company as they have the voting
rights and enjoy decision making authority on important matters, related to the
company.
• The shareholders’ return is in the form of dividend, which is dependent on the
profits of the company and capital gain/loss, at the time of their sale.
• They enjoy higher returns if the company performs well and may not get any
dividend at all, if the company does not do well or when the board of directors do
not recommend any dividend for payment.

14.
FEATURES OF EQUITY SHARES
Maturity
Claims on
Income
Cost of
Equity
Claims on
Asset
Control
Pre-Emptive
Right

15.
ADVANTAGES OF EQUITY SHARES
Capital profit
Interest in the company’s activities
Best for investment
More income
Right to interfere in management

16.
ADVANTAGES TO COMPANY
No-fixed burden of dividend
No outflow of cash
Bear the risk
Simple and cheap source
Increase in debt capacity
Availability of fixed capital

17.
DISADVANTAGES OF EQUITY SHARES
Uncertainty of income
Irregular income
Capital loss
Less attractive to modest investors
Loss in the case of liquidation

18.
DISADVANTAGES TO COMPANY
Difficult to remove over capitalization
Centralization of control
Change in management policy
Speculation

19.
PREFERENCE SHARES
• Preference shares are those shares which carry certain special or priority
rights. Firstly, dividend at a fixed rate is payable on these shares before
any dividend is paid on equity shares.
• Secondly, at the time of winding up of the company, capital is repaid to
preference shareholders prior to the return of equity capital.
• Preference shares do not carry voting rights. However, holders of
preference shares may claim voting rights if the dividends are not paid for
two years or more on cumulative preference shares and three years or
more on non-cumulative preference shares.

20.
FEATURES OF PREFERENCE SHARES
Accumulation of dividends
Call-ability
Convertibility
Redeem ability
Participation in surplus profits and assets
Voting power

21.
ADVANTAGES OF PREFERENCE SHARES TO
INVESTORS
Priority in
repayment
of capital
Best security
Regular and
fixed income
Less risk
Safety of
interest

22.
ADVANTAGES OF PREFERENCE SHARES TO
INVESTORS
No
interference in
management
Economical
financing
Availability of
wide capital
market
No change in
assets

23.
DISADVANTAGES OF PREFERENCE SHARES TO
INVESTORS
Limited voting
right
Uncertain position
of redeemable
preference shares
Dividend at fixed
rate

24.
DISADVANTAGES OF PREFERENCE SHARES TO
COMPANY
Difficult to
receive
additional
capital
High cost of
capital
Disadvantage
to equity
shareholders
Fixed economic
burden

25.
DIFFERENCE BETWEEN PREFERENCE SHARES AND
EQUITY SHARES

26.
DEBENTURES
• A debenture is an instrument executed by the company under its common seal
acknowledging indebtedness to some person or persons to secure the sum advanced.
• It is thus a security issued by a company against the debt.
• In India, a public limited company is allowed to raise debt capital through debentures
after getting certificate of commencement of business, if permitted by its
memorandum of association
• Debenture is defined as an instrument issued by the company under its common seal
acknowledging a debt and setting forth the terms under which they are issued and
are to be paid.

27.
FEATURES OF DEBENTURES
Fixed
interest rate
Maturity
No voting
right
Secured
assets

28.
TYPES OF DEBENTURES
From
security
point of view
From
permanence
point of view
From records
point of view
From
convertibility
point of view
From priority
point of view

29.
FROM SECURITY POINT OF VIEW
Simple
Debenture
Mortgage
Debenture

30.
FROM PERMANENCE POINT OF VIEW
Redeemable
Debentures
Irredeemable
Debentures

31.
FROM RECORD POINT OF VIEW
Bearer
Debentures
Registered
Debentures

32.
FROM CONVERTIBILITY POINT OF VIEW
Convertible
Debentures
Non-Convertible
Debentures

33.
FROM PRIORITY POINT OF VIEW
First
Debentures
Second
Debentures

34.
ADVANTAGES OF DEBENTURES
Advantages of the
company
Advantages
to Investors

35.
ADVANTAGES OF THE COMPANY
Consolidation of debt
Controlling over capitalization
Boon during depression
Capital from moderate investors
Certainty of finance
Tax benefits
Freedom in management
Trading on equity
Lower rate of interest

36.
ADVANTAGES OF THE INVESTORS
Fixed and
stable
income
Safety
investment
Liquidity fixed
maturity
period
Conversion of
loan

37.
DISADVANTAGES OF DEBENTURES
Disadvantages of the
company
Disadvantages
to Investors

38.
DISADVANTAGES TO COMPANY
Fixed charge on
Assets
Fixed
burden
Risk of
winding Up

39.
DISADVANTAGES TO INVESTORS
No Control
No extra
profits
Uncertainty

40.
RETAINED EARNINGS
• Retained earnings is also referred as ploughing back of profits
means the reinvestments by concern of its surplus earnings in its
business.
• It is an external source of finance and is most suitable for an
established firm for its expansion, modernization and replacement
etc.

41.
ADVANTAGES OF RETAINED EARNING TO THE
COMPANY
• Cushion to absorb the shock of economy
• Economical method of financing
• Aids in smooth and undisturbed running of business
• Helps on following stable dividend policy
• Flexible financial structure
• Makes the company self dependent
• Helps in making good the deficiencies of depreciation
• Enables the redeem long term liabilities

42.
ADVANTAGES OF RETAINED EARNING TO THE
SHAREHOLDERS
• Increase in value of shareholders
• Safety of investment
• Enhanced earning capacity
• No dilution of control
• Evasion of super tax

43.
ADVANTAGES OF RETAINED EARNING TO THE
SOCIETY AND NATION
• Increase the rate of capital formation
• Stimulates industrialization
• Increase productivity
• Decreases the rate of industrial failure
• Higher standard of living

44.
DISADVANTAGE OF RETAINED EARNING
• Over capitalization
• Creation of monopolies
• Depriving the freedom of the investors
• Misuse of retained earnings
• Manipulation in the value of shares
• Evasion of taxes
• Dissatisfaction among the shareholders

45.
LOANS FROM FINANCIAL INSTITUTIONS
• Financial institutions such as commercial banks, life insurance corporations,
industrial finance corporations, industrial development bank of India etc., also
provide short-term, medium term, and long term loans.
• This source of finance is more suitable to meet the medium term demands of
working capital.
• Interest is charged on such loans at a fixed rate and the amount of the loan is to
be repaid by way of instalments in a number of years.

46.
FEATURES OF LOANS FROM FI
Security
Interest payment
and principal
repayment
Restrictive
covenants

47.
ADVANTAGES OF LOAN FROM FI
Borrowers
point of view Lender’s point of
view

48.
BORROWERS POINT OF VIEW
• In post-tax terms, the cost of term loans is lower than the cost of equity capital or
preference capital.
• Term loans do not result in dilution of control, as lenders do not have the right to
vote

49.
LENDER’S POINT OF VIEW
• Term loans earns a fixed rate of interest and have a definite maturity
period.
• Term loans represent secured loans
• Term loans carry several restrictive covenants to protect the interest if the
lender

50.
DISADVANTAGES OF LOAN FROM FI
Borrowers
point of view Lender’s point of
view

51.
BORROWERS POINT OF VIEW
• The interest and principal repayment are obligatory payments. Failur to meet
these payments may threaten the existence of the firm.
• Term loans contracts carry restrictive covenants which may reduce managerial
freedom. Further , they entitle the lenders to put their nominee on the board of
the borrowing company.
• Term loans increase the financial risk of the firm. This, in turn, tend to raise the
cost of equity capital

52.
LENDER’S POINT OF VIEW
•Term loans do not carry the right to vote
•Term loans are not represented by
negotiable securities.

53.
SHORT TERM SOURCES OF FINANCE
Public
deposits
Factoring
Certificates
of deposits
Advances
Commercial
paper
Commercial
banks
Trade credit
Installment
credit

54.
INSTALMENT CREDIT
• Instalment credit is the method by which the assets are purchased and the
possession of goods is taken immediately but the payment is made in
instalments over a predetermined period of time.
• Generally, interest is charged on the unpaid price or it may be adjusted in
the price.
• But, in any case, it provides funds for sometime and is used as a source of
short term working capital by many business houses which have difficult
fund position.

55.
ADVANTAGE OF INSTALMENT CREDIT
Facilitates expansion
and modernization
of business and
office
Saving of one time
investment
Convenient payment
for assets and
equipment's
Immediate
possession of assets

56.
DISADVANTAGE OF INSTALMENT CREDIT
Cash does not
flow
Additional
burden in case
of default
Obligation to
pay interest
Committed
expenditure

57.
ADVANCES
• Some business houses get advances from their customers and
agents against orders and this source is a short term source of
finance of them.
• It is a cheap source of finance and in order to minimize their
investment in working capital, some firms having long production
cycle, especially the firms manufacturing industrial products prefer
to take advances from their customers.

58.
ADVANTAGES OF ADVANCES
Interest free
No
tangible
security
No
repayment
obligation

59.
DISADVANTAGES OF ADVANCES
Limited amount
Limited period
Penalty in case of non-
delivery of goods

60.
TRADE CREDIT
• Trade credit refers to the credit extended by the suppliers of goods in the normal course of business. As
present day commerce is build upon credit, the trade credit arrangement of a firm with its suppliers in an
important source of short term finance.
• The credit worthiness of a firm and the confidence of its suppliers are the main basis of securing trade credit.
It is mostly granted on an open account basis whereby supplier sends goods to the buyer for the payment to
be received in future as per terms of the sales invoice.
• It may also take the form of bills payable whereby the buyer signs a bill of exchanges payable on a specified
future date.

61.
ADVANTAGES OF TRADE CREDIT
informalityflexibility
Easy
availability

62.
DISADVANTAGES OF TRADE CREDIT
•Finance is charging of higher prices by the
suppliers
•Loss of cash discount

63.
CERTIFICATE OF DEPOSIT
• The certificate is a document evidencing the existence of a bank deposit and it is tradable, so
that, in effect, the bank deposit can be transferred between different owners before it comes o
be repaid.
• This is one money market security which does not operate on the basis of discounts.
• Interest is paid in the normal way on the bank deposit but the price of the certificate of deposit
will vary in the market depending on how the rate of interest on the deposit, which is fixed,
compares with general interest rates.
• Certificates of deposits are issued by banks as a means of encouraging the making of short-term
deposits.

64.
ADVANTAGES OF CERTIFICATE OF DEPOSIT
Better return
Safe return
Good and
long term
effect

65.
DISADVANTAGES OF CERTIFICATE OF DEPOSIT
Loss
return
Long
maturity
period
Penalty
Need
patience

66.
COMMERCIAL PAPER
• Commercial papers are those unsecured promissory notes which are
issued by well-reputed companies. Their buyers are bank, insurance
companies, unit trust, and firms
• They can be sold in two ways-directly and indirectly.
• In other words, the company can directly sell the commercial paper
to the buyer or can take the help of some agency.

67.
ADVANTAGES OF COMMERCIAL PAPER
• The advantage of CPs lies on the simplicity they offer, as large amounts can be
raised without having aby underlying transaction
• CPs provide flexibility to the company to raise funds in the money market
wherever it is favourable
• CPs can raise fund from inter-corporate market which is not under the control of
any monetary authority
• CPs provide cheaper finance to the borrowers and at the same time offer good
rate of return to the investors.

68.
DISADVANTAGES OF COMMERCIAL PAPER
• It is impersonal method of financing. If a firm is unable to redeem its paper due
to financial difficulties, it may not be possible for it to get the maturity of paper
extended.
• It is available always to financially sound and highest rated companies. A firm
facing temporary liquidity problems may not be able to raise funds by issuing
new paper.
• The mount of loanable funds available in the commercial paper market is limited
to the amount of excess liquidity of the various purchasers f commercial paper
• It can not redeemed until maturity. Thus if a firm no more needs the funds, it
cannot repay until maturity and will have to incur interest costs.

69.
FACTORING
• Credit management is a specialised activity and involves a lot of
time and effort f a company collection of receivables poses a
problem, particularly for small-scale enterprises. Banks have the
policy of financing receivable.
• However, this support is available for a limited period and the seller
of goods and services has to bear the risk of default by debtors. A
company can assign its credit management and collection of
specialist organisation called factoring organization.

70.
ADVANTAGES OF FACTORING
Advantages to
clients
Advantages
to the
customer
Advantages
to banks

71.
ADVANTAGES TO THE CLIENT
• The client can offer competitive credit terms to his buyers which, in turn, enable
him to increase his sales and profits
• The cash realized from credit sales can be used to accelerate the production cycle.
• The client is free from the tensions of monitoring his sales ledger and can
concentrate on production, marketing, and other aspects. This results in a
reduction in overhead expenses and an increase in sales and profit.
• Factoring results in a close alteration among working capital components of the
business. Efficient management of one component can have positive impact on
other components.

72.
ADVANTAGES TO THE CUSTOMERS
• Factoring facilitates the credit purchases o the customers as they get adequate
credit period
• Customers save on bank charges and expenses
• The customers has not to furnish any documents. He has merely to acknowledge
the notification letter,. i.e., an undertaking to make payment of the invoices to the
factor.
• Factoring does not impinge on the customer’s rights vis a vis the suppliers in
respect of quality of goods, contractual obligations, and so on

73.
ADVANTAGES TO BANKS
• Factoring improves liquidity of the clients and
thereby, improves the quality of advances of
banks. Factoring is not a threat to banking; it is a
financial service complementary to hat of the
banks.

74.
LIMITATIONS
costlier
Deleterious
effect on the
creditworthiness
Credit limits on
trade
Difficult to exit
the agreement
Reliance on
factor

75.
COMMERCIAL BANKS
• Commercial banks are the main institutional sources of working capital finance in
India. After trade credit, bank credit is the most important source of financing
working capital requirements in India.
• Commercial banks are those banks which perform all kinds of banking functions
such as accepting deposits, advancing loans, credit creation, and agency function
• In India 20 major commercial banks have been nationalised, whereas in
developed countries they run like joint stock companies in the private sector.
• Some of the commercial banks in India are Andra Bank, Canara Bank, Indian bank
etc.

76.
ADVANTAGES OF COMMERCIAL BANKS
Smooth
functioning of
foreign trade
Provides
documentary
proof
General utility
services
Attractive rate
of interest
Agency
service
Financial
assistance

77.
DISADVANTAGES OF COMMERCIAL BANKS
Lack of
expert
Declining
trends in
profitability
Lower
efficiency
Increasing
overdues
Regional
imbalance
Insufficient
growth

78.
PUBLIC DEPOSITS
• Public deposits are the fixed deposits accepted by a business enterprise directly
from the public.
• This source of raising short-term and medium-term finance was very popular in
the absence of banking facilities.
• Many firms, large and small, have solicited unsecured deposits from the public in
recent years, mainly to finance their working capital requirements.

79.
ADVANTAGES OF PUBLIC DEPOSITS
Simple
and easy
No charge
on assets
Economical
Flexibility

80.
DISADVANTAGES OF PUBLIC DEPOSITS

81.
FINANCIAL MARKETS

82.
FINANCIAL MARKET
• A financial market is a mechanism that allows
people to buy and sell financial securities (such as
stock and bonds), commodities and other fungible
items of value at low transaction costs and at
prices that reflect the efficient-market hypothesis

83.
CHARACTERISTICS OF FINANCIAL MARKETS

84.
TYPES OF FINANCIAL MARKET
Types of
financial market
Money Market
Capital market
Primary Market
Secondary
market

85.
MONEY MARKET

86.
MONEY MARKET
• The term money market is used in a composite sense to mean financial
institutions which deal with short term funds in the economy.
• It refers to the institutional arrangements facilitating borrowings and
lending of short term funds.
• The money market brings together the lenders who have surplus short
term investible funds and the borrowers who are in need of short term
funds. In a money market, funds can be borrowed for a short period
varying from a day, a week, a month, or 3 to 6 months and against
different types of instruments, such as bill of exchange, bankers’,
acceptance, bonds, etc., called ‘near money’.

87.
DEFINITION
• The center for dealings mainly of a short term
character, in monetary assets; it meets the short-
term requirements of borrowers and provides
liquidity or cash to the lenders
Reserve bank of India

88.
NATURE AND CHARACTERISTICS OF MONEY
MARKET
• Highly organised commercial banking system
• Apex central bank
• Adequate availability of credit instruments
• Number of dealers
• Existence of a large number of sub-markets
• Integrated interest structures
• Responsive
• Remittance facilities
• other factors

89.
MONEY MARKET INSTRUMENTS

90.
ADVANTAGES OF MONEY MARKET
Source of
capital
Ideal
investment
Effective
monetary
management
Economic
development
Efficient
banking
system
Facilitating
trade
Helpful to
government

91.
DISADVANTAGES OF MONEY MARKET
• Purchasing power of investors money goes down, in case of increase in
inflation
• Irrational structure of interest rates
• Highly volatile market
• Seasonal stringency of loanable funds
• Lack of funds in the money market
• Inadequate banking facilities

92.
CAPITAL/SECURITIES
MARKET

93.
CAPITAL/ SECURITIES MARKET
• Where a security is traded (primary or secondary trading) is called a market.
• The capital market refers to the institutional arrangements for facilitating the
borrowing and lending of long-term funds
• In the widest sense, it consists of a series of channels through which the savings of the
community are made available for industrial and commercial enterprises and public
authorities.
• It is concerned with those private savings, individual as well as corporate, that are
turned in investments through new capital issues and also new public loans floated by
government and semi government bodies.

94.
NATURE OF CAPITAL MARKET
• The Indian capital market consists of organised and unorganised sector
• The demand for funds in the organised sector is mostly for productive investment, a large part
of the demand for funds in the unorganised market is for consumption purposes
• The demand for funds comes mostly from corporate enterprises, government and semi
government institutions.
• The supply of funds comes from households savings and institutional investors like banks,
investments trusts, insurance companies, finance corporations, government and international
financing agencies.
• The Indian capital market is characterized by the existence of multiplicity of interest rate,
exorbitant rates o interest and lack of uniformity in the business dealings.

95.
FEATURES OF CAPITAL MARKET
Security
market
Security
prices
Participants
Location

96.
FUNCTION OF CAPITAL MARKET
Merger
function
Transfer
function
Savings and
investment
function
Indicative
function
Liquidity
function
Allocation
function

97.
IMPORTANCE OF CAPITAL MARKET
• Capital market serves as reliable guide to the performance and financial position of
company
• A continuous valuation of companies as reflected in the share price and the implied
possibility of in merger and takeovers
• Stock market promotes growth through the creation of liquidity
• Stock market attracts foreign investment, which leads to improved accounting,
reporting standards and exposes domestic companies to advances managerial
techniques
• Stock market at times helps companies to obtain equity finance in the absence of
loans from money market.

98.
CONSTITUENTS OF CAPITAL/SECURITY MARKET
Primary market
Secondary market

99.
PRIMARY MARKET
• The primary market represents the new issue market where new
securities, i.e., shares or bonds that have never been previously
issued, are offered. Both the new companies and the existing ones
can raise capital on the new issue market.
• The prime function of the new issue market is to facilitate the
transfer of funds from the willing investors to the entrepreneurs,
setting up new corporate enterprises or going in for expansion,
diversification, growth or modernization

100.
FEATURES OF PRIMARY MARKET
• Primary market concerns new long-term capital
• Securities are sold for the first time in this market
• It is also known as new issue market
• Securities are issued directly to investors
• Security certificates are issued to investors
• Securities are issued by companies for setting new business and for expanding or modernization existing business.
• It facilitates capital formation in the economy
• Funds generated in this market are utilized for the purchase of fixed assets
• It does not include long-term loans from financial institutions

101.
ROLE AND FUNCTION OF PRIMARY MARKET
Origination
Underwriting
Distribution

102.
LIMITATIONS OF PRIMARY MARKET

103.
STOCK EXCHANGES/
SECONDARY MARKET

104.
STOCK EXCHANGE/ SECONDARY MARKET
• The secondary market, also known as ‘aftermarket’, is the financial market where
previously issued securities and financial instruments such as stock, bonds,
options and futures are bought and sold.
• The term secondary market is also used to refer to the market for any used goods
or assets or an alternative use for an existing product or asset where the customer
base is the second market.
• Stock exchanges are organised and regulated markets are various securities
issued by corporate sector and other institutions. The stock exchanges enable
free purchase and sale of securities as commodity exchange allow trading in
commodities

105.
FEATURES OF STOCK EXCHANGE
• Stock exchange deals in previously issued securities.
• This market is not the place of the origin of the security.
• Securities are not issued directly by the company to investors.
• Securities are sold by the existing investors to other investors
• The intending buyer and seller can buy and sell securities through brokers
• Stock exchange provides liquidity to the investment and enhances the marketability of
securities
• Stock exchange merely transfers existing securities between buyers and sellers.

106.
ROLE AND FUNCTION OF STOCK/EXCHANGE

107.
PROCEDURE FOR DEALING AT SECONDARY
MARKET/STOCK EXCHANGE
Settlement
Contract
note
Marketing
the
contract
Placing an
order
Selection of
broker

108.
LIMITATIONS OF SECONDARY MARKET

109.
STOCK EXCHANGE IN INDIA
• Indian stock exchanges are a structures marketplace for the proper conduct of
trading in company stock and other securities
• There are twenty three recognised stock exchanges in India.
• The main service of the Indian stock exchanges all over the country are to provide
nation-wide services to investors and to facilitate the issue and redemption of
securities and other financial instruments
• The two most important exchange houses of the Indian stock market are the
National Stock Exchange and the Bombay stock Exchange.

110.
BOMBAY STOCK EXCHANGE (BSE)
• Bombay stock exchange is the oldest stock exchange in Asia and what is now
popularly known as the BSE. It was established as ‘The Native Share and Stock
Brokers’ Association in 1875.
• Over the past 135 years, BSE has facilitated the growth of the Indian corporate
sector by providing it with efficient capital raising platform.
• BSE is the first exchange in India, and the second in the world to obtain an ISO
9001:2000 certifications. It is also the first exchange in the country and second in
the world to receive information security management system.

111.
FEATURES OF BSE
• It is the oldest and largest stock exchange in Asia
• It is fifth largest stock market in the world
• Approximately 6,000 Indian companies are listed with Bombay Stock Exchange.
• It is the first stock exchange that introduced equity derivates in India.
• Free Float Index, US$ version of BSE Sensex and internet trading platform wre
launched initially by Bombay Stock exchange in India
• It is the first amongst all stock exchange in the country to collect ISO certification
from Surveillance, clearing and settlement

112.
NATIONAL STOCK EXCHANGE (NSE)
• The national stock exchange (NSE) is India’s largest securities exchange in terms
of daily trade numbers.
• It offers automated electronic trading of a variety of securities, including equity,
corporate debt, Central and state government securities, commercial paper,
certificate of deposits and exchange traded funds.
• The exchange has more than 1,000 listed members. Owned by more than twenty
different financial and insurance institutions. NSE specialize in three market
segments-wholesale debt, spatial market and future options

113.
SECURITIES AND EXCHANGE BOARD OF INDIA
(SEBI)
• In 1988, the securities and exchange board of India
(SEBI) was established by the Government of India
through an executive resolution, and was
subsequently upgraded as a fully autonomous
body in the year 1992 with the passing of SEBI Act
on 30 January 1992.

114.
OBJECTIVES OF SEBI ACT
• To protect the interests of investors in securities
• To promote the development of the securities
market
• To regulate the securities market
• For matters connected there with or incidental
thereto.

115.
FUNCTIONS OF SEBI
• To register and regulate the working of stockbrokers
• To register and regulate the working of bankers to an issue
• To control and regulates securities market
• To exercise the powers under SEBI Act.
• To regulate the working of mutual funds
• To perform such other functions as may be prescribed
• To control fraudulent and unfair trade practices relating to securities market.